One Big Switch – How Many Fuel Cards Should I Buy?

Many of you in Australia would be aware of The One Big Switch most recent offer “The Big Petrol Switch”. Today there was an announcement that a deal has been done with BP to get an effective discount of 5.66% when purchasing your fuel in advance. The obvious question that comes to mind now is “how many fuel cards should I buy?”. There are quite a few things you need to take into account, including:

How much fuel do you use each week.

How much do you normally pay per litre, and is your local BP station more expensive than other options.

Do you have a home loan with a variable mortgage rate

What is your marginal tax rate

So you may be wondering why numbers 3 and 4 above are relevant. They are relevant because you have to purchase these fuel cards in advance – as such the fuel cards are a financial investment of your money. If you purchase a $500 fuel card, your money will be tied up and you wont be able to access it until you have spent all the money on fuel. Like everything in economics, there is always an opportunity cost of what you do with your money. So you could use your $500 to buy a fuel card, or you could use your $500 as an extra payment against your home loan – both have the potential to give you a benefit.

I have produced a spreadsheet to help me determine how many fuel cards to buy for myself, and I am providing that same spreadsheet here for anyone else that would like to use it. All you need to do is enter your relevant details and the spreadsheet will calculate the value you can get from purchasing fuel cards.

One important thing to look at is the effective savings in cents per litre. Most of us are used to looking at this figure, and it will give you a good sense if this is offer is good for you.

Disclaimer: I am not an accountant and I do not warrant that this spreadsheet is defect free. I am providing it to share in good faith. Each person should verify the information and calculations in this spreadsheet are correct and represent their own circumstances. I takes no responsibility for any loss resulting from using this spreadsheet.